Missouri, Kansas & Texas Trust Company v. Richardson

• Decision Date: 09 February 1899
• Docket Number: 8689
• Parties: MISSOURI, KANSAS & TEXAS TRUST COMPANY, APPELLANT, v. F. G. RICHARDSON ET AL., APPELLEES
• Court: Nebraska Supreme Court

78 N.W. 273

57 Neb. 617

MISSOURI, KANSAS & TEXAS TRUST COMPANY, APPELLANT, v. F. G. RICHARDSON ET AL., APPELLEES

No. 8689

Supreme Court of Nebraska

February 9, 1899

APPEAL from the district court of Lancaster county. Heard below before HOLMES, J. Reversed.

REVERSED AND REMANDED.

Thomas Ryan, for appellant.

C. A Atkinson, contra.

As to the effect of the assignment see: Conrady v Bywaters, 24 S.W. 961; Wood, Landlord & Tenant 737; Jackson v. Davis, 5 Cow. [N. Y.] 124; Bliss v Gardner, 2 Ill.App. 422; Fletcher v. McFarlane, 12 Mass. 42.

General creditor cannot reach assets or set aside transfers. (McConnel v. Dickson, 43 Ill. 99; Scott v. M'Millen, 1 Litt. [Ky.] 302; Southard v. Benner, 72 N.Y. 424; Brown v. Long, 1 Ired. [N. Car.] 190; Massey v. Gorton, 12 Minn. 83; Dahlman v. Jacobs, 15 F. 863; Heyneman v. Dannenberg, 6 Cal. 376; Dormueil v. Ward, 108 Ill. 216; High, Injunctions sec. 1403; Bassett v. St. Albans Hotel Co., 47 Vt. 314; Wiggins v. Armstrong, 2 Johns. Ch. [N. Y.] 144; Day v. Washburn, 24 How. [U. S.] 355; Dunham v. Cox, 2 Stockt. Ch. [N. J.] 437; Thurmond v. Reese, 3 Ga. 449; Jones v. Green, 1 Wall. [U. S.] 330; Birely v. Staley, 5 Gill & J. [Md.] 432; Rice v. Barnard, 20 Vt. 479; Brittain v. Quiet, 1 Jones Eq. [N. Car.] 328; Sanders v. Watson, 14 Ala. 198; Miller v. Davidson, 3 Gil. [Ill.] 518; Baxter v. Moses, 77 Me. 465; Henderson v. McVay, 32 Ala. 471; Castle v. Bader, 23 Cal. 76; Brown v. Bank of Mississippi, 31 Miss. 454; Meux v. Anthony, 11 Ark. 411; Dunlevy v. Tallmadge, 32 N.Y. 427; Griffin v. Nitchner, 57 Me. 270; Uhl v. Dillon, 10 Md. 500; Rich v. Levy, 16 Md. 74; Briggs v. Austin, 129 N.Y. 208; Tennent v. Battey, 18 Kan. 324; Martin v. Michael, 23 Mo. 50; Rollins v. Van Baalen, 56 Mich. 610; Crompton v. Anthony, 95 Mass. 33.)

OPINION

SULLIVAN, J.

In October, 1891, Theodore F. Barnes was the owner of the Windsor Hotel in the city of Lincoln. The property was incumbered by two mortgages, the first being for $ 25,000 and the second for $ 5,000. The second mortgage was given to, and owned by, the appellant, the Missouri, Kansas & Texas Trust Company. The hotel was leased by Barnes to F. G. Richardson for a term of five years, commencing February 10, 1892, at a monthly rental of $ 416.66, payable each month in advance. This lease was assigned by the lessor to the trust company as collateral security for his indebtedness to it; and in order to induce said company to dismiss a pending action for the foreclosure of its mortgage, Mr. Richardson, at the instance of Barnes, paid to the appellant upon the lease the sum of $ 3,368.75. This payment was made on or about October 8, 1891, that being the day upon which the lease was executed. January 1, 1893, Richardson assigned his lease to Jennie Opelt, and at the same time sold her the hotel furniture, supplies, etc., taking back, as security for the unpaid purchase price, which amounted to $ 6,500, a chattel mortgage upon the property sold. April 2, 1894, to secure an indebtedness of $ 1,215.83, Mrs. Opelt gave Richardson a second chattel mortgage covering the same property described in the $ 6,500 mortgage. This second mortgage was on September 28, 1894, assigned to the appellant as security for rent then in arrears. July 28, 1893, Richardson transferred to his daughter, Clara M. Richardson, the first mortgage upon the hotel furniture and other property therein described. After the trust company became the assignee and owner of the second chattel mortgage it commenced this action against Jennie Opelt, F. G. and Clara Richardson in the district court of Lancaster county. The purpose of the suit is indicated by the prayer of the petition, which is here set out: "Wherefore this plaintiff asks that an injunction issue restraining the sale of said property described in said first named chattel mortgage, or the taking of said property under said chattel mortgage, for the purpose of foreclosure; that the assignment thereof from said Frederick G. Richardson to his daughter, Clara M. Richardson, be declared null and void, and that it be set aside and held for naught; that an accounting be taken of the amount yet due from said Frederick G. Richardson to plaintiff and judgment entered therefor; that the lien of the first chattel mortgage be declared junior and inferior to the lien of the plaintiff, and that the amount found due on said chattel mortgage No. 59710 be declared a first lien on said chattel property; that it be declared in full force and effect, valid and subsisting, and that on the final hearing of this case the injunction be declared and decreed perpetual; and that the plaintiff have such other, further, or different relief as it may be entitled to, including costs of this case." The court rendered judgment against Richardson for the sum of $ 11,702.19, and against Opelt for the sum of $ 12,948.34. The other relief prayed for was denied.

In view of the conclusion at which we have arrived it will not be necessary to separately consider the several propositions ably discussed by counsel for the trust company. Plaintiff acquired its chattel mortgage with notice of the fact that it was junior and subordinate to the mortgage for $ 6,500 executed by Opelt to Richardson. It had a right, of course to proceed by action to enforce its security, and as an incident to that right it was entitled to bring the Richardsons before the court in order to have the rank of their mortgage and the amount due upon it adjudicated. But clearly the plaintiff is not entitled to have the transfer from Mr. Richardson to his daughter canceled, nor the further disposition of the mortgage by Miss Richardson enjoined. It is true the plaintiff had a second mortgage on the hotel furniture, but it did not have a specific lien upon the first mortgage. That was Richardson's property, and a mere general creditor could not impound it. The mortgaged chattels belong to Mrs. Opelt, and the plaintiff can assert no right to them except through the mortgages. The first mortgage was not made in fraud of the rights of Richardson's creditors, and a fraudulent assignment of it could not change the fact that it was and is a first lien on the hotel furniture. If it is an equitable asset available to Richardson's creditors, it must be reached in the usual way after the ordinary remedy has been exhausted. (High, Injunctions sec. 1041; Dormueil v. Ward, 108 Ill. 216; Briggs v. Austin, 129 N.Y. 208, 29 N.E. 4; People's Savings Bank v. Bates, 120 U.S. 556, 30 L.Ed. 754, 7 S.Ct. 679.) We approve the action of the trial court in refusing to annul the transfer of the mortgage from Richardson to his daughter and in...